Bed Bath & Beyond sales rose nearly 50% in the first quarter as the retailer’s turnaround initiatives, including new brand launches and store redesigns, helped attract customers for everything from mixers to bath mats .
The progress made in the run-up to the important back-to-school shopping season was enough for the company to raise its full-year sales forecast.
However, first quarter results have been hurt and continue to be weighed down by the costs Bed Bath & Beyond incurs to successfully turn the business around.
“We are at the beginning of our transformation,” said CEO Mark Tritton during a conference call on the results. “Our first quarter results show that we can continue to achieve profitable growth as we restore our authority in our own country.”
Bed Bath & Beyond shares fell after the results were released, and recently rose more than 11%. The share had gotten into a so-called meme trading frenzy by private investors on the Reddit social platform. But ahead of Wednesday’s results, Bank of America analyst Curtis Nagle said stocks have resumed trading at “pre-rise levels”.
Here’s what the company reported for the three months ended May 29, compared to Wall Street’s expectations based on an analyst survey by Refinitiv:
- Earnings per share: 5 cents adjusted vs. 8 cents expected
- Revenue: $ 1.95 billion versus an expected $ 1.87 billion
Bed Bath & Beyond said its net loss had dropped to $ 51 million, or 48 cents per share, from a loss of $ 302 million, or $ 2.44 per share, last year. Excluding one-off costs related to asset sales and other turnaround initiatives, the company earned 5 cents per share, which was below the 8 cents per share that analysts had expected.
Net sales increased 49% from $ 1.3 billion a year ago to $ 1.95 billion, beating expectations of $ 1.87 billion.
Digital sales accounted for 38% of total sales as some customers chose to browse and shop online and pick up their orders the same day at nearby Bed Bath & Beyond locations. Last month, the company partnered with DoorDash to offer buyers same-day home delivery.
The company said its so-called core revenue – which consists of revenues from Bed Bath & Beyond, Buybuy Baby, Harmon Face Values and Decorist – increased 73% year over year. At Bed Bath & Beyond, growth in bedding, bathroom, kitchen utensils and interior decorations outpaced other categories.
Comparable sales – tracking sales online and in stores that have been open for at least 12 months – increased 86% compared to 2020 and increased 3% on a two-year basis. According to StreetAccount estimates, analysts had expected year-on-year growth of 75.6%.
The comparable sales were adjusted to take into account the negative effects of the ongoing store closings. Locations that were permanently closed in fiscal 2020 would have contributed around 13% to the retailer’s core sales in the first quarter of the fiscal year, the company said in its press release. As of May 29, the retailer had a total of 1,004 stores, including 818 of its eponymous Bed Bath & Beyond locations.
So far, an important part of Bed Bath & Beyond’s turnaround plans is ahead of schedule. It is in the process of bringing a variety of in-house brands into the kitchen, bedding and organization categories.
By 2023, private label sales are expected to grow from around 10% at the end of last year to 30% of business. Bed Bath & Beyond aims to increase margins by selling more in-house products. This is one way the company can hopefully offset some of the heavy expenses it incurs when it invests in doing business refresh, for example. The retailer expects to remodel up to 150 locations in North America this fiscal year.
In the first quarter of the fiscal year, Bed Bath & Beyond launched the bedding and bathroom label Nestwell, a spa-inspired line Haven and an everyday basics line called Simply Essential. It has a number of other labels along the way.
It has also stepped up marketing to make itself known as an all things home destination. A nationwide TV and social media campaign entitled “Home, Happier” was recently launched.
“We started the year stronger and are clearly on track to achieve our goals,” said Tritton.
Bed Bath & Beyond raised its full-year revenue forecast to $ 8.2 billion to $ 8.4 billion, up from an earlier estimate of $ 8 billion to $ 8.2 billion. Adjusted earnings between $ 1.40 and $ 1.55 per share are expected for fiscal 2021. Analysts had expected adjusted earnings of $ 1.47 per share for the full year on sales of $ 8.15 billion.
For the second quarter, Bed Bath & Beyond expects to make between 48 cents and 55 cents per share after adjustments. Sales will be between $ 2.04 billion and $ 2.08 billion.
According to Refinitiv data, analysts were looking for adjusted earnings of 52 cents per share on sales of $ 2.02 billion in the second quarter.
Bed Bath & Beyond is now the newest retailer to sweeten the benefits for workers. The company grants parents up to eight weeks of paid leave after the birth, adoption or care of a new child. Many companies have invested in better wages and benefits in order to attract employees in a tight labor market.
The full results release from Bed Bath & Beyond can be found here.